Only “the Punctilio” if I Say So: How Contractual Limitations on Fiduciary Duties Deny Protection to Victims of Oppressive Freeze-Outs within Private Business Entities


Justice Cardozo first famously formulated the unassailable core of fiduciary duties in Meinhard v. Salmon: “Joint adventurers, like co-partners, owe to one another the duty of the finest loyalty something stricter than the morals of the market place. Not honesty alone, but the punctilio of an honor the most sensitive is the standard of behavior.” In the wake of the rise of the contractarian paradigm – championed by Delaware corporate law’s juggernaut of contractual excess – Cardozo’s vision of an obdurate fidelity provided by strict and immutable fiduciary duties appears to have met its greatest challenge. The scope of the fiduciary duty has been gradually eroded since Cardozo’s seminal statement of its predominate authority. It has suffered trivialization by the business judgment rule and marginalization by some states’ statutes that oppressively constrict the fiduciary definition or liberally allow members to “opt-out” of the fiduciary duty entirely.
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